Zimbabwe’s Varun Beverages gets special economic zone status

ZIMBABWE – VarunBeverages Zimbabwe (Pvt) Ltd, a soft drink manufacturer and Pepsi bottler in the country has been declared a special economic zone (SEZ) as an incentive from government in its plans of investing US$23 million in a new plant.

The announcement was made by the Zimbabwe Special Economic Zones
Authority chief executive officer Mr Edwin Kondo through an Extraordinary
Government Gazette, reports The Herald.

“It is hereby notified that, in terms of section 20 (1) of the Special
Economic Zones Act (Chapter 14:34), the Zimbabwe Special Economic Zones
Authority, has declared arun Beverages (Zimbabwe) (Private) Limited as a
special economic zone,” said Mr Kondo.

Nqobizitha Mangaliso Ndlovu, Minister Industry and Commerce, said that
government decided to declare Varun Beverages a special economic zone
considering its ambitions to boost local production.

“They are expanding; they are putting a plant which is worth more than US$23
million and they have to improve their reach out in the country, their access.

They also want to improve exports because they have already started
exports so a special economic zone, really, grants them corporate tax relief
not VAT relief for a period of five years.

At least if people are bringing in such investment, as Government we
also make an effort to support them through such kinds of incentives. That is
mainly the implications of the special economic zone,” said Minister Ndlovu.

The government introduced the special economic zones in a bid to lure more
investors into the country.

Through SEZs, an entity in the country enjoys financial policies including
corporate tax exemption for the first five years of operation and a corporate
tax rate of 15% thereafter.

Additionally, the firm may also be entitled to specialised expatriate
staff tax at a 15% flat rate as well as duty-free importation of capital
equipment and exemptions for non-residents withholding tax on royalties.

Raw materials and intermediate products imported for use by companies
in special economic zones are also imported duty-free, but the exemption does
not apply where raw materials are produced locally.

Currently, Varun beverages has dominated the soft beverage market in
the country following the absence of Delta Beverages- bottler of Coca-Cola products
due to shortages of foreign currency that has adversely hampered its operations.

Last Year, Varun Beverages commissioned a US$40 million beverage plant
in Zimbabwe with a capacity to produce 600,000 bottles on a daily basis.